Correlation Between Enerplus and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Enerplus and Devon Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enerplus and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerplus and Devon Energy, you can compare the effects of market volatilities on Enerplus and Devon Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enerplus with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerplus and Devon Energy.
Diversification Opportunities for Enerplus and Devon Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Enerplus and Devon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Enerplus and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Enerplus is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enerplus are associated (or correlated) with Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Enerplus i.e., Enerplus and Devon Energy go up and down completely randomly.
Pair Corralation between Enerplus and Devon Energy
Considering the 90-day investment horizon Enerplus is expected to generate 1.29 times more return on investment than Devon Energy. However, Enerplus is 1.29 times more volatile than Devon Energy. It trades about -0.01 of its potential returns per unit of risk. Devon Energy is currently generating about -0.04 per unit of risk. If you would invest 1,801 in Enerplus on August 23, 2024 and sell it today you would lose (174.00) from holding Enerplus or give up 9.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.26% |
| Values | Daily Returns |
Enerplus vs. Devon Energy
Performance |
| Timeline |
| Enerplus |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Devon Energy |
Enerplus and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerplus and Devon Energy
The main advantage of trading using opposite Enerplus and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerplus position performs unexpectedly, Devon Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Devon Energy will offset losses from the drop in Devon Energy's long position.| Enerplus vs. Vermilion Energy | Enerplus vs. Canadian Natural Resources | Enerplus vs. Baytex Energy Corp | Enerplus vs. Obsidian Energy |
| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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